Board discusses feasibility of building new hospital

An outside consultant hired by the MUSC Board of Trustees to study the feasibility of building a new women's and children's hospital told board members Thursday that the proposal will work but probably won't be very profitable over the next 10 years.

The new hospital is expected to cost $350 million, up from a $313 million projection in 2010.

"This is not a particularly cost-effective approach," said board member William Hewitt. "It's high risk, low return."

Dr. Pat Cawley, executive vice president for clinical operations at Medical University Hospital, agreed with Hewitt that the project carries risks, but the MUSC Children's Hospital must be upgraded.

"We are between a rock and a hard place. We have to upgrade," Cawley said. "It's a dicey situation, but I don't see any alternative."

If the board proceeds with the project, the new hospital would not open for at least six years.

Reach Lauren Sausser at 937-5598.

Obamacare makes for strange bedfellows.

Medical University Hospital is expected to join forces Friday with four competitors in an effort to save money. Leaders say the driving force behind this partnership is health care reform.

"The ACA (Affordable Care Act) is really putting pressure on hospitals to cut costs," said Dr. Pat Cawley, vice president for clinical operations at the hospital. "This is a response to that."

Medical University Hospital will team up with Greenville Health System, McLeod Health in Florence, Palmetto Health in Columbia and Self Regional in Greenwood to create a new limited liability company called Initiant Health Collaborative.

Other hospitals have forged similar partnerships before - AnMed Health in Anderson and Roper St. Francis Healthcare are both affiliated with Carolinas HealthCare System, a network of 30 hospitals in North Carolina and South Carolina. Barney Osborne, vice president for finance and reimbursement at the S.C. Hospital Association, said it has become increasingly common for hospitals, especially smaller facilities in rural South Carolina, to strike these deals with competitors.

"As in any industry, an increase in volume will generally create better negotiating power and hence cost savings," Osborne said. "The same holds true for small and rural hospitals as well. Many of these hospitals are also 'circling the wagons,' but on a smaller scale or by affiliating with larger facilities. In many ways, the ACA is bringing new concerns and risks to an already severely challenged financial industry."

But this type of formal collaboration among some of the largest, wealthiest hospital systems in South Carolina is unprecedented. On Thursday, Osborne said he did not know about the new partnership.

Initiant Health Collaborative will be owned by its members and will be governed by a Board of Managers. Members will convene in Columbia for board meetings six times a year starting in June. Each hospital was required to provide a $25,000 initial investment in the project.

While the hospitals will continue to do business independently and will still be run by their own boards, stakeholders believe the partners can save money by increasing their combined purchasing power and making strategic technology investments, among other initiatives. The group also is committed to improving population health.

"We think there are ways to actually get together and still remain independent," Cawley said.

"The bottom line is we're still competitors," he told the MUSC Board of Trustees during a committee meeting Thursday.

Committee members expressed unanimous support for the plan. The full board is expected to approve the deal on Friday.

Eventually, other hospitals could join the collaborative, too, as long as they are part of nonprofit systems and aren't involved in any other similar partnerships, Cawley said. It's possible that the collaborative may eventually include hospitals outside South Carolina.

The Patient Protection and Affordable Care Act, which was passed by Congress in 2010, is forcing hospitals to find ways to cut costs. The law will eventually decrease the amount of money the federal government pays hospitals to treat uninsured patients. Hospitals are also bracing for commercial insurance payments to decline.

"We're all trying to prepare for it," Cawley said. "That's affecting every hospital in the nation."

Reach Lauren Sausser at 937-5598.